When to Buy and Sell your Shares?

This has the been the most famous and age old question regarding Stock Trading. Simply due to the fact that 'When to Buy and When to Sell' is the core function behind stock trading and if you're an expert at deciding this, you can easily be a Pro at trading and end up unbelievably rich!!

Sorry to disappoint you though, but there's really no hard and core rule regarding when to buy and sell. That's the harsh and cold truth. Some may call it intuition, luck or sometimes pretty decent hard work and thought and decision making skills. However it is said and done, there are really a few basic things that you should know that could actually save your life in the stock market and hopefully not end up making losses for you. 

When to buy?

Actually most people think or it may seem very appealing to buy a stock which has it's price moving up. It may logically seem valid. The price is moving up so it will continue further more and when I have enough profit I'll sell it. Just like that. But that's not the correct way to approach the market. You should always focus on stocks that have decreasing price movements. or more like stocks that have lost it's market price and fallen down to a low value. Why? Simply because, if a share was performing well and had dropped to a lower level, it has a HUGE potential to reach back to it's previous price or even further more. A price that is already increasing only has a huge potential to drop. So always we should eye for stocks that have recently lost it's value. Buy them quickly and wait till the prices recover. You cannot loose this way, because the price was already down it wouldn't go any further down but only up. So guaranteed you will end up with a profit.

When to sell?

Buy and sell may seem like two opposites, and it is, but the same core rules as of buying shares apply for selling shares. This doesn't mean that you have to sell when the prices have dropped. The ideal time to sell a stock would be when it shows signs of dropping price. Now, if you picked a stock at a lower value as I've mentioned above any increase in price would earn you a profit, so when the stock shows even the slightest signs of dropping prices, sell them. Don't wait thinking it'll recover, just sell it. You won't loose anything since you bought at a lower price.

So that's about it.

This is NOT buying/selling recommendation. 

Further Reference:

What is the Stock Market/Stock Exchange?

Stock Market

Stock Market or commonly mentioned as Stock Exchange is the market where stocks/shares of listed (Quoted Public Limited Companies) companies are being traded or bought or sold among buyers and sellers. It's as simple as that. But the process is much more complicated than that. 

Let's see how a company enters the Share Market. There are basically two ways, namely;

1) IPO - Initial Public Offering

2) SPO - Secondary Public Offering

IPO

An Initial Public Offering is where a company ENTERS the stock exchange with a share issue to the public. If the share issue is successful (meaning if all shares are bought by the public) it will be considered a valid share issue and the company name will be listed in the stock exchange and allowed to function as a PLC. However if the shares are not fully subscribed (bought) by the public, the IPO will be considered void or a failure and the Stock Exchange will not allow the company to proceed with it's business activities. 

Entering the market with an IPO involves some risk due to the above factor. If the public doesn't feel like the company is a safe and worthwhile investment, they will not buy the shares and the company will be forced to shut down. Why? Because a share issue is the main mode of capital generation for a company and when it comes to an IPO, it is the step which a company tries to generate capital to START a company, so if that fails there's simply no money to start the business. To avoid this companies use a method called "Under Writing". Under Writing means prior to an IPO, the company gets a bank to sign a deal with the company to purchase the shares of a company in the event the public refuses to buy the full amount of shares. This deal offers security for the company as-well-as some assurance for the public that if the bank trusts the company we should not worry too. So Under Writing works in those two ways and help IPOs get successful.

SPO

Secondary Public Offering is where a company ALREADY LISTED in the Stock Exchange issues shares to the public. A company could have many number of SPOs in it's life time. All the share issue except for the first and foremost share issue will be falling under the category of a SPO. SPOs generally do not involve very much risk so Under Writing agreements are not of necessity and even if a SPO fails, it will not threaten the existence of the company. Usually a company goes for a SPO to generate additional capital maybe for expansion activities, new researches and developments and activities like that. So that's about the two main methods a company gets enlisted in the stock exchange.